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30 yr vs. 15 yr Mortgages — Which Loan Terms Are Right for You?

Most homebuyers tend to automatically assume that they’re going to be making mortgage payments for the next thirty (30) years in order to pay off their home. While that’s the case for most US home buyers, believe us or not, it isn’t your only option. Paying off your loan for thirty years can be daunting for some who would much rather own 100 percent of their house sooner. We understand that here at Greenfront — so offering alternative solutions, like a fifteen (15) year mortgage, is an excellent way for our clients to build home equity faster.

Not sure which loan term is best for you? Below you’ll get a quick overview of the differences between the thirty (30) year mortgage — America’s sweetheart — and the lesser-known fifteen (15) year mortgage. Check out our blog for other mortgage insights, tips, and recommendations.

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Fixed-rate 30-year

A fixed-rate 30-year mortgage is most common because it allows prospective buyers to secure affordable monthly payments on what they see as a forever home. Plus, thirty years is more than enough time for buyers of multiple ages (currently, Millennial buyers fit this category perfectly) to be able to consider making a purchase. Getting approved for a 30-year mortgage is easier for most buyers since it requires a lower down payment and a higher interest rate than the 15-year mortgage counterpart.

Fixed-rate 15-year

15-year fixed-rate mortgages may be difficult to afford for some, but you don't necessarily have to put more down to qualify — you just need to have enough room in your DTI ratio to be able to support a 15 year mortgage and the relatively higher monthly payments. These shorter loans also offer lower interest rates as an incentive to make payments and build equity faster. By building equity in your home twice as quickly, you don’t have to continue making payments for 15 more years, and any additional value your home gains is pure profit in your pockets.

For both loan types, it’s crucial for buyers to secure the lowest interest rate possible by putting more money down while also possessing a noteworthy credit score. You’re stuck with the mortgage for either a long time or a very long time, so pay as little interest to the lender as possible.

Want to chat with our team about which loan terms would make the most sense for your unique situation? Contact us today, and we’ll be happy to dive a bit deeper.